Feed in Tariff – What Effects Will It Have?

By on 23rd November in Home Inspiration

I am sure you all will have seen in the news recently that the government is cutting the current Feed-in-Tariff from 43.3p per kWh to 21p per kWh. It is a change that was inevitable, but it is one that has come abruptly, with the government misjudging the rate of growth in photovoltaic solar energy.

This change will take effect for any solar installations completed after 12th December 2011, meaning if you were interested in making your home more energy efficient, you need to act fast!! Anyone who has already got a photovoltaic solar installation, do not fear as these changes will not affect you. If you are already signed up to the tariff it is fixed for 25 years, so you will continue to get 43.3p per kWh.

Although this has been sprung on us, is it really as bad as it sounds? What does it mean for the solar industry and the energy efficiency of the UK?

It is going to effect different groups in different ways and not all are negative. Due to this change I can see there being fewer installations per year, especially in comparison to this year, which has rapidly increased, going from 8,000 installations in June to 16,000 in September. The reason behind this massive increase in installations is possibly due to the cost of solar panels decreasing by as much as 30 since the scheme started. However, the reason there will be less installations after the changes will be because of the reduced tariff. Rent-a-roof companies, that put solar on your property for free, giving you free electricity whilst they take the tariff, will not be making as much money (if any at all), which could result in company losses or closures.

The change has not just brought a lower tariff, but it has prevented installations across the country. 30 schools in Dorset will not be utilising a proposed £1 million installation that was due to happen next year. The local council calculated that each school would make a loss of £2,000, despite them still creating green energy, it is no longer feasible.

The government’s reason behind this sudden change is because of the rapid growth in the solar market. With hundreds of thousands of installations cropping up this year, and the massive decrease in photovoltaic panel prices, means that the government’s green energy budget would no longer cover the costs, especially if this growth continued. With the global economy as it is, the government had to implement a new plan to help save money. They initially wanted to give generators of solar energy 5-8 rate of return, but they ended up giving out 10 rate of return, which hit the budget hard.

The new tariff will take full hold by April 1st 2012, when your house may have to reach a specific energy efficiency rating to get the 21p tariff. It is not yet clear what that level is, but I think if you are installing solar panels, you are pretty switched on about energy efficiency and will have carried out other home improvements before hand, to save money on your bills.

Feed in Tariff changing

However, it is not all doom and gloom for solar energy, we must all think of the positives of having photovoltaic panels. By putting them onto your home you are still generating your own electricity, resulting in cheaper bills or none at all! If you are generating more than you use, you will still earn money, but instead it is only 21p per kWh. Photovoltaic solar energy is an eco-friendly generator, so you are doing your bit to help prevent draining the world of its natural resources that are running out quickly.

As I have said before, solar panels are now about 30 cheaper, so it doesn’t cost us as much to have them installed and they will generate energy past their guarantee, bringing you years of power. Free electricity and the green credentials that accompany solar energy, have got to be a winning combination for the future of energy supply, so I think it is an investment well worthwhile.

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